With huge reserves of minerals, oil and gas buried under their icebound
nation, Greenland's tiny population may be about to become very rich.

IN his office overlooking the snowy peaks of south-west Greenland, Joshua Hughes pulls out a map showing one of the world’s toughest treasure hunts. Amid a series of rock formations with nicknames like the Quartz Swarm and UFO Mountain, a cluster of red dots are marked along a ridge overlooking an iceberg-flecked fjord. Written next to the dots is the geologist’s equivalent of “X-marks the spot” - the letters “Au”, by which gold is known in the periodic table.

“It’s exceptionally high grade gold, comparable to the Yukon or Alaska,” says Mr Hughes, a Welshman who is chief geologist at NunaMinerals, an exploration company based in Greenland’s tiny capital, Nuuk. “The ridge has a drop of about 600 feet on either side, which makes it logistically difficult, but it’s manageable.”

The goldmine-to-be lies 350 miles south-east of Nuuk in the barren, concrete-grey mountains near Nanotarlik - Place of Polar Bears - a tiny village where locals scrape a living through seal hunting. If it succeeds, it has the potential to make Mr Hughes and his colleagues very rich, and turn Greenland into a modern-day Klondike, reversing the decline of villages like Nanotarlik (population 1,337 and falling).

But it isn’t just gold in them there hills. There’s also iron, silver, rubies and diamonds - plus, offshore, up to 10 percent of the world’s remaining oil and 30 percent of its gas. And then there is the likes of praseodymium, terbium and neodymium, the so-called “rare earth elements” that make up the very DNA of 21st century life.

Today, their supermagnetic, superconductive properties make them vital in everything from i-Phones and solar panels through to hybrid cars, and Greenland has some of the world’s largest deposits under its slowly-receding glaciers. By a mischievous quirk of nature, the very melting of the polar icecaps is opening up access to the substances that are key to a hi-tech, low-carbon future.

Last month, Greenland’s parliament removed a final obstacle to exploiting rare earth minerals by voting to lift an historic ban on mining for uranium ore, in which many rare earth minerals are found. The ban was in place because of environmental concerns about mining radioactive materials, but Greenland’s prime minister, Aleqa Hammond, insists the country urgently needs to end its dependence on fishing and hunting.

“We cannot live with unemployment and cost-of-living increases while our economy is at a standstill,” said Ms Hammond, 48, whose own father died after falling through the ice on a hunting trip when she was a child.

If Greenland is the new frontier, then towns like Nuuk are its boom towns in waiting. A collection of weatherboard houses perched on naked rock, it is the world’s smallest capital, with just 15,000 people. It has three sets of traffic lights, the only ones in a country the size of Western Europe. Yet with its restaurants selling whale sushi, cinema and raucous nightclub, “Manhattan”, it is a bustling metropolis by local standards.

Housing in Nuuk, Greenland (Photo: Julian Simmonds)

With no road network at all, Greenland’s outlying towns are accessible only by boat or aircraft, with many home to fewer than 100 people. Houses often lack flushing toilets, village shops stock everything from nappies to guns, and to this day, many locals earning a living by hunting seals, whales and polar bears. The difference is that now, they film prize catches on their mobile phones - and share it with friends in the next village 100 miles away via Facebook.

Right now, though, the talk on Greenlandic Facebook forums is no longer just about hunting, shooting and fishing, but the prospect of a minerals and energy boom that has the potential to change life here forever. To what extent it is commercially exploitable will depend on fluctuations in commodity prices. But the US Geological Survey believes the oil reserves alone may run to 40 billion barrels - equivalent to that drilled off the Scottish coast since 1975.

Greenlanders gained partial independence from their old colonial master Denmark four years ago, so the lion’s share of taxes on oil or minerals sales will go into a new sovereign wealth fund. Per capita, it could equate to a fortune, given that it would be shared out among just 57,000 people. It would also cement independence from Denmark, which still subsidises a third of its state budget.

“Now is our chance to get wealthy,” said Jenseeraq Noahsen, 53, a halibut fisherman who lives in “Little Russia”, one of several drab blocks of Soviet-style flats in Nuuk, where jobseekers fleeing the unemployment in smaller villages often end up. “We can also really control our own future.”

A tour of Nuuk - which takes all of ten minutes - shows how the scramble for the Arctic is already under way. Not far from NunaMinerals is the office of a British firm, London Mining, which last month won permission for a £1.4bn iron ore mine expected to get funding from mineral-hungry China, a project that could on its own double the size of Greenland’s economy.

Out at sea, oil giants like Shell and Conoco Phillips are sniffing around, and some 150 licences have been awarded for mineral exploration. In summer, temporary “exploration villages” now spring up across the country like Polar expedition camps. Such is the buzz that a Danish “Scandi-crime” writer has even penned a Greenland-based thriller, in which a round of tenders for an oil operation lead to murder.

But while Nimbyism is not a problem in a country with only one person per 9,000 acres of land, it does not take the gloomy mind of a Scandi-crime writer to see pitfalls. Green groups point out that oil spills in Greenland’s stormy, ice-filled seas will be hard to clear up, because slicks disperse much more slowly in very cold water. And just like the Klondike of old, an influx of foreigners may also bring with crime, prostitution and drugs to Greenland’s indigenous Inuits, who are 90 per cent of the population. It may be no coincidence that Greenland is currently building its first ever jail for high-risk prisoners, having previously sent them to Denmark.

“Because we are so few people here, the population could easily double overnight, and it’s hard to imagine what the consequences would be,” says Nuuk singer Nive Nielsen, of Greenlandic folk pop band the Deer Children, whose song Uulia (Oil) questions the government’s haste. “This is a country where people still hunt for their dinner. It’s a very different culture.”

Such anxieties loom large over the London Mining project, which will require a workforce of around 2,000. The company estimates that Greenland’s native skill base can only fill at most ten per cent of the building jobs, so the rest are expected to go to imported Chinese workers.

But while they will largely be confined to a remote base, the project, which has attracted interest from the state-owned China Development Bank, has sparked concerns of a more geopolitical nature. Thanks to its own historically lax environmental controls on mining, China currently controls some 95 per cent of the world’s supply of rare earth minerals, and has restricted exports to the outside world, despite complaints by the European Union to the World Trade Organisation. The EU now fears that Greenland’s politicians - novices on the world stage, and drawn from an electorate the size of an English borough council - may be too easily wooed by Chinese investment, allowing Beijing to monopolise their resources.

One Greenland politician who fits the description of “novice” well is Jens-Erik Kirkegaard, the minerals minister. Aged just 38, and with a preference for trendy sweaters rather than shirt and tie, he looks more like an IT officer than a politician, and until recently, that is what he was. He only got into politics after listening to a radio phone-in show debating the minerals issue, and deciding that many Greenlanders had little real idea what was at stake.

Today, he is courted by ambassadors and multi-nationals, although he insists that the notion of Beijing cornering the global market in hi-tech minerals like some James Bond villain is exaggerated.

“From what some people say, you’d think the Chinese had taken over,” he said, “But they are a very important player so Greenland has to be aware of that. Besides, we can adapt to change. There is room here for miners, and for fishermen and hunters.”

Others are less sure. China’s record on respecting pollution laws is “not great”, said Mikkel Myrup, a local environmentalist. “Industry PR people can paint a very positive picture,” he added. “An inexperienced government like ours may not read between the lines.”

When it comes to persuasive PR, few have had their work cut out more than Birmingham-born Nick Houghton, president of Canadian firm True North Gems. Since 2004, TNG has been exploring for rubies near Qeqertarsuatsiaat, a village of 240 people four hours by speedboat from Nuuk, where gemstones stud the surrounding hills like a red carpet.

It is the last large ruby deposit on earth, and villagers have long had a cottage industry selling low-grade rubies as ornaments. But because of the site’s commercial potential, Greenland’s government now insists that locals get a licence if they wish to sell the stones commercially, sparking claims that an ancient right was being withdrawn.

“To get the licence is a very bureaucratic process,” complained one former ruby prospector, who keeps a stash of rubies in a sugar bowl in his house. “It’s supposed to be quick, but that’s only for the foreign companies.”

Rather like the film Local Hero, in which an American oil man is despatched to persuade a Scottish village to make room for a refinery, Mr Houghton made his case at a town hall meeting in Qeqertarsuatsiaat in August. He pointed out that the mine will create up to 80 local jobs, and argued that since TNG has spent $23 million locating promising ruby sites, it has a right to protect its investment.

“It is a case of ’get orf my land’ because I have spent $23 million to get it,” he said. “Besides, there is now a licensing system for smaller artisan miners, and we can work together. If TNG can raise the international profile of Greenland rubies, they will get a better price.”

The real crunch, though, will be whether Mr Houghton and other prospectors can actually turn a profit. An Edinburgh-based explorer, Cairn Energy, has already spent $750m drilling for oil off Greenland without making finds in commercial quantities, and margins will always be thinned by the formidable logistical challenges.

Because while it may now be possible to grow vegetables in southern Greenland, and to navigate the melted pack ice of the North West passage in summer, temperatures still reach minus 60C in winter, when there is also six weeks of round-the-clock darkness. The go-ahead may have been given for a new era of exploration, but it may be a while before traffic lights are needed outside Nuuk.